Former RBI governor Raghuram Rajan said there was a lot of time to put together a plan for Yes Bank which had given “enough” notice about the problems it was facing.
“Yes Bank had given us enough notice that it has been in difficulty…so there was enough time to put together a plan. “I hope what we have got is best available (plan), but I don’t want to second guess, because I don’t know the details,” Rajan said in a media interview to CNBC-TV18.
He asserted he has been saying for a long time now that there is a need to clean up the financial sector quickly and in a resolute way so that the country can move forward.
“Unwillingness to clean up has prolonged state of malaise in Indian economy…
“Clean up has to be undertaken on an emergency basis, otherwise sense of confidence which is needed in our NBFC, private banks and even in our state-owned banks that would be missing, that means financial sector cannot contribute to the growth,” he said.
“So this is something we started in 2015, and it’s 2020, 5 years is too long for it,” he said. Rajan said no amount of interest rate cut is going to help if credit growth is weak.
“Are companies willing to borrow and invest on the basis of lower interest rates… Unless we fix the financial system, it’s like trying to send water through broken pipes. It’s going to leak out all over the place,” he said.